It is related to the second and the third step of controlling process. As per this, when the goals are set, the measurement of actual performance and then at the third step, actual performance is compared with the standards.

It is given in the case that the production has declined by 10% and the department wasted a lot of raw material. Thus, in this case, measurement helps to analyze the efficiency of the production department.

The values of a company ignored by the production manager are:

(i) Lack of initiative, commitment, etc.

(ii) Showing irresponsible behavior because he neither saves the money nor the raw material of a company.

Controlling is an expensive and time taking process. Considerable time and huge expenditure is required to install a control system. Thus, it is suggestive that small enterprises should not install it, at it may not justify the expenses involved. Personal observation method can be adopted for this purpose, since it is a less expensive way to monitor the progress of tasks and behaviour of employees.

Controlling is an important managerial function. It is concerned with taking preventive actions against deviations. It is the process, through which managers assure that the actual activities conform to the planned activities. Controlling has a very wide scope. It does not end only by comparing the actual performance with planned performance, but its tries to find the reasons and solutions for such problems also.

    The main objective of controlling is to ensure that work is carried on as per plans. Secondly, it enables managers to find out errors and also provide direction, so that work goes on right track.

Controlling is measuring and correcting the activities of subordinates to ensure that events conform to plans.
1. Setting Performance Standards
Standards are the criteria, against which actual performance would be measured. These serve as benchmarks, towards which an organization strives to work.
The first step of the control process is to establish standards, against which actual results are to be evaluated. standards are set in quantitative as well as qualitative terms. But, managers should try to set standards in quantitative terms, which can be easily measured and compared later on.
If standards are set in qualitative terms, an effort must be made to define them clearly for easy measurement. Due to changes taking place in the internal and external environment, standards need to be revised regularly.

2.Measurement of Actual Performance
Once the standards are fixed, the next step is to measure the actual performance. Generally, it is conducted by the managers to analyze the overall efficiency level of the employees. While measuring the performance, objective and reliable methods should be used, such as sample checking, preparing reports, personal observation, etc.
Measurement should be done after the task is completed. However, sometimes performance can be measured during the performance to ensure regular control over the activities. Usually, in large organizations, certain pieces are checked at random, instead of checking the whole lot. This is called sample checking.
3. Comparing Actual Performance with Standards
This step involves comparison of actual performance with the standard. Such comparison helps in revealing the deviations between actual and desired results. The comparison becomes easier when standards are set in quantitative terms.
4. Analyzing Deviations
Under this step, deviations in key areas of business need to be attended on urgent basis as compared to deviations in certain insignificant areas. There is need to determine the acceptable range of deviations in all operational areas. Following points should be kept in mind while analyzing deviations:
(i) Critical Point Control
According to this principle, the control system should first focus on Key Result Areas (KRAs) which are critical to the success
of the organization. It is because it is not possible to keep a check on all the activities of the enterprise. Therefore, if anything goes wrong at the critical points or key areas, immediate action should be taken. e.g. A 5% increase in labor cost is more critical than a 20% increase in postal charges, as 5% increase in labor cost will affect profitability.
(ii) Management/Control by Exception
It suggests that, if the manager tries to control everything, he may end up in controlling nothing.
Thus, in this context, it is stated that managers should first handle the deviations, which are beyond the specific range and he should not waste his time and energy in finding solutions of minor deviations. e.g. 2% increase in labor cost is an acceptable range of deviation. If the labor cost exceeds beyond 2%, immediate action should be taken.
Advantages of critical point control and Management by exception 
The following are the advantages of critical point control and management by exception:
(a) It saves time and effort of the managers as they deal with major deviations only.
(b) There is better utilization of managerial talent.
(c) It facilitates delegation of authority and increases morale when routine problems are left to the subordinates.
(d) Timely action helps to keep the organization on the right track.
5. Taking Corrective Action
This is the final step in which manager takes corrective measures to bring back everything on track in the organization i.e. according to set plans, corrections are required in KRAs, which are critical to the success of the organization, or, in areas where deviations go beyond the permissible limits.
Corrective action may involve training of employees, hiring labor for extra time, replacement of machinery, etc. Sometimes, if deviations cannot be corrected despite the best efforts of managers, standards may be revised.

Controlling is measuring and correcting the activities of subordinates to ensure that events conform to plans.
1. Setting Performance Standards
Standards are the criteria, against which actual performance would be measured. These serve as benchmarks, towards which an organization strives to work.
The first step of the control process is to establish standards, against which actual results are to be evaluated. standards are set in quantitative as well as qualitative terms. But, managers should try to set standards in quantitative terms, which can be easily measured and compared later on.
If standards are set in qualitative terms, an effort must be made to define them clearly for easy measurement. Due to changes taking place in the internal and external environment, standards need to be revised regularly.

2.Measurement of Actual Performance
Once the standards are fixed, the next step is to measure the actual performance. Generally, it is conducted by the managers to analyze the overall efficiency level of the employees. While measuring the performance, objective and reliable methods should be used, such as sample checking, preparing reports, personal observation, etc.
Measurement should be done after the task is completed. However, sometimes performance can be measured during the performance to ensure regular control over the activities. Usually, in large organizations, certain pieces are checked at random, instead of checking the whole lot. This is called sample checking.
3. Comparing Actual Performance with Standards
This step involves comparison of actual performance with the standard. Such comparison helps in revealing the deviations between actual and desired results. The comparison becomes easier when standards are set in quantitative terms.
4. Analyzing Deviations
Under this step, deviations in key areas of business need to be attended on urgent basis as compared to deviations in certain insignificant areas. There is need to determine the acceptable range of deviations in all operational areas. Following points should be kept in mind while analyzing deviations:
(i) Critical Point Control
According to this principle, the control system should first focus on Key Result Areas (KRAs) which are critical to the success
of the organization. It is because it is not possible to keep a check on all the activities of the enterprise. Therefore, if anything goes wrong at the critical points or key areas, immediate action should be taken. e.g. A 5% increase in labor cost is more critical than a 20% increase in postal charges, as 5% increase in labor cost will affect profitability.
(ii) Management/Control by Exception
Thus, in this context, it is stated that managers should first handle the deviations, which are beyond the specific range and he should not waste his time and energy in finding solutions of minor deviations. e.g. 2% increase in labor cost is an acceptable range of deviation. If the labor cost exceeds beyond 2%, immediate action should be taken.
Advantages of critical point control and Management by exception 
The following are the advantages of critical point control and management by exception:
(a) It saves time and effort of the managers as they deal with major deviations only.
(b) There is better utilization of managerial talent.
(c) It facilitates delegation of authority and increases morale when routine problems are left to the subordinates.
It suggests that, if the manager tries to control everything, he may end up in controlling nothing.
(d) Timely action helps to keep the organization on the right track.
5.Taking Corrective Action
This is the final step in which manager takes corrective measures to bring back everything on track in the organization i.e. according to set plans, corrections are required in KRAs, which are critical to the success of the organization, or, in areas where deviations go beyond the permissible limits.
Corrective action may involve training of employees, hiring labor for extra time, replacement of machinery, etc. Sometimes, if deviations cannot be corrected despite the best efforts of managers, standards may be revised.